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Mental-health parity laws require oversight

December 1, 2009 | 10:17
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Consumers need more information regarding new laws that mandate insurance coverage for mental-health treatment, according to an analysis of the first five years of the mental-health parity law in California. Based on California's experience, the authors suggest that government oversight is needed to monitor not only costs and coverage issues but also access to care and quality of care issues.

The review, published today in the journal Psychiatric Services, describes the experiences of consumers, health plans and doctors in responding to the mental-health parity law in California that went into effect in 2000. Lessons from California's experience could be valuable to the success of the new national parity law that will take effect in January. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act will provide mental health services and substance abuse coverage to 113 million Americans.

The study, by researchers at Mathematica Policy Research and the Substance Abuse and Mental Health Services Administration, used data from interviews and focus groups to draw conclusions about the success and failures of the California law from 2000 to 2005. Among the findings:

Costs associated with parity were in line with, or even below, the projections.

Most health plans responded to the parity law by lifting limits on the annual number of days allowed for inpatient treatments and the number of visits allowed for outpatient treatment.

Concerns arose over the use of "medical necessity" clauses to authorize treatments and control costs. Medical necessity is typically defined as the need to supply a service for a condition that could endanger life or cause significant illness, suffering or disability and for which there is no adequate, less costly alternative available.

Consumers also complained about being referred to lists of mental-health providers only to find out that providers on the list were not taking new patients.

Health insurance providers felt the list of diagnoses covered under the parity law was arbitrary in excluding certain diagnoses.

Some doctors reported that they chose a parity diagnosis for a patient in order to ensure insurance coverage although it wasn't the most accurate diagnosis. Some doctors said they had little flexibility to change a client's diagnosis if he or she improved because they believed the health plan would then stop providing coverage for continuing care or care for a lesser diagnosis.

Nearly half of Californians polled in focus groups were unaware of the parity law.

Public education campaigns should accompany the introduction of the federal parity law, the authors of the paper wrote, noting that the effort could yield another benefit. "Enhanced public education may also lead to reduced stigma associated with mental illness."